Understand how the Overnight Policy Rate (OPR) set by Bank Negara Malaysia influences your home loan repayments, interest rates, and refinancing opportunities.
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What is the Overnight Policy Rate (OPR)?
The Overnight Policy Rate (OPR) is the key interest rate set by Bank Negara Malaysia (BNM). It determines the cost of borrowing between banks and serves as a benchmark for commercial lending rates.
When BNM raises or lowers the OPR, it directly impacts:
- Home Loan Interest Rates → Changes in Base Rate (BR) or Standardised Base Rate (SBR).
- Monthly Loan Repayments → Higher OPR = higher installments; lower OPR = lower installments.
- Loan Affordability & Approvals → Banks adjust lending criteria based on OPR movements.
Latest OPR Updates in Malaysia (2025)
- July 2025: OPR reduced from 3.00% to 2.75% to support economic growth.
- September 2025: OPR remains steady at 2.75%, with analysts predicting no major hikes until at least 2027.
Source: Bank Negara Malaysia, Reuters Economic Outlook Reports
How OPR Changes Affect Home Loan Rates
1. Variable (Floating) Rate Loans
- OPR ↓ → Lower BR/SBR → Lower Interest Rates → Lower Monthly Payments
- A 0.25% OPR cut typically saves around RM70–RM75 per month on a RM500,000 loan over 30 years.
2. Fixed-Rate Loans
- Unaffected during the loan tenure → same monthly installment.
- However, new fixed-rate packages may adjust based on OPR trends to stay competitive.
Impact of OPR on Borrowers & Savers
| Impact Area | When OPR Decreases | When OPR Increases |
|---|---|---|
| Home Loan Borrowers | Lower monthly payments | Higher monthly payments |
| Refinancing | Better refinancing opportunities | Refinancing may become less attractive |
| Loan Approvals | Higher loan eligibility (lower DSR) | Tighter loan approvals |
| Savings Returns | Lower interest on FD/savings accounts | Higher FD/savings returns |
Example: OPR Impact on Monthly Payments
| Loan Amount | Tenure | OPR Change | Monthly Repayment Difference |
|---|---|---|---|
| RM 500,000 | 30 years | –0.25% | ~ RM 70–75 less per month |
| RM 500,000 | 30 years | +0.25% | ~ RM 70–75 more per month |
Malaysia Home Loan Interest Rates (2025)
| Bank Name | Interest Rate (p.a.) | Loan Tenure (Years) | Monthly Instalment (RM) | Minimum Loan Amount (RM) |
|---|---|---|---|---|
| Maybank | 3.50% | Up to 35 | 1,850 | 100,000 |
| CIMB | 3.55% | Up to 35 | 1,870 | 100,000 |
| Hong Leong Bank | 3.60% | Up to 35 | 1,880 | 100,000 |
| Public Bank | 3.65% | Up to 35 | 1,890 | 100,000 |
| RHB Bank | 3.70% | Up to 35 | 1,900 | 100,000 |
Compare Loan Packages →
How to Respond to OPR Changes
- Review your home loan rate: If it’s floating, track OPR announcements closely.
- Refinance if rates drop: Secure better long-term savings when OPR declines.
- Plan ahead if OPR rises: Prepare for higher monthly payments by adjusting your budget.
Frequently Asked Questions (FAQ)
Q1. Does OPR affect all home loans?
- OPR affects variable-rate loans directly but not existing fixed-rate loans.
Q2. How much can I save when OPR drops?
- On average, a 0.25% cut saves about RM70–RM75 per month on a RM500k, 30-year loan.
Q3. How often does OPR change?
- Typically reviewed six times a year by Bank Negara Malaysia.
Q4. How can I check my bank’s latest housing loan rate?
- Visit our Loan Rates page for real-time updates.
Fredrick is the creator behind houseloancalculatormalaysia.online, dedicated to helping Malaysians easily understand and calculate their home loan payments. With a focus on accuracy and simplicity, Fredrick develops reliable tools and clear guides to empower users to make informed financial decisions. His goal is to provide trustworthy, user-friendly resources that save time and reduce confusion in the complex world of home loans.